Showing posts with label real estate sector. Show all posts

Friday, 15 April 2016

Real estate sector of Bangalore is more optimistic in 2016



Are you aware about the Bangalore market? Do you know about the pros and cons of Bangalore market? Do you know that Bangalore is one of the most prosperous markets of India? Bangalore is a city with at least 20 percent minimum returns on realty investment. The office space and commercial realty investment in Bangalore has been the highest in the last year in this city. The city also tops in the list of the NRI preferences too. The city also has the least amount of unsold stock now which means that business in the last few lean years were fairly well compared to other cities. There are large developments going on in Bangalore in places like Devenahalli, Doddabellapur and the like. This is again garnering demand in turn in the city.

In the last year the real estate prices of Bangalore has seen a bit of correction says the experts due to the stability of the rupee value, more investment and a strong growth oriented government. This was coupled with more NRI investment as the value of Rupee started falling. 

The realtors remark that the potential and the prospective clients are looking at quality products and timely delivery. This is what the expectation of the market is. They opine that if this is delivered and the expectation of the markets attained there is a good possibility of the market sentiments to improve considerably. They feel that this is obvious as the new real estate bill is in the offing to be implemented with the new infrastructure in place. The expert realtors remark that along with all these good indicators of the market what’s needed is the speedy work of the infrastructure developments like the Metro railway work. They remark that these are the demand drivers and hence the government has to see the speedy completion of such works.


The other factor that the realtors and the trend watchers point out is there are two types of customers in a city like Bangalore. One is the outsiders or the NRIs who invests more due to the weakening of the rupee which makes the goods cheaper. This entails bigger foreign investments. The other factors are the customers who take huge loans in purchasing their houses, flats and apartments from banks and financial institutions. Now with the falling interest rates of the loans and home loans from 11 percent to 10 percent there is renewed interest of the customers. Bangalore is specifically end user driven market and purchase driven market and not a speculative one. This is the reason stability of the prices and even a price correction is noted.

The trend watchers also opine that there is no longer a great boom in the IT sector experiencing a high hike in the salaries. The situation virtually is that there are no jobs and money in the market and hence there isn’t any money to pay for new houses. They opine that all the factors seem to be good except the job generation factor which is in a bit of lull. It is not that the jobs are not created but the affordability is not there of those whose jobs are created as real estate products are high priced. In such a situation what the realtors are looking at is the real estate regulatory bill which is already being passed. Furthermore they are also awaiting the passing of the Land Acquisition, Rehabilitation and Resettlement Bill which is supposed to bring transparency in the sector.

Tuesday, 16 February 2016

Bangalore has very scanty unsold realty stock at 2.2 percent.


From the onset of 2015 there was a hue and cry in the country’s real estate sector about the unsold stock in the nation. The developers had reduced the launching of the new apartments or introducing new products in the market. The reason however is the slow sales and the low buyer’s sentiments across the country. But if that is the state of the most of the major markets of the nation let’s see what is the state of affairs in the market of Bengaluru. Is it the same story or is it any different?

In Bengaluru the trend watchers remark that the sales did pick up and the rate was higher in the city compared to most places in the country. According to a study conducted by the renowned global consultant JLL between 2010 and 2015, 2, 06,753 residential units were launched and the total unsold units remaining out of these were 4,492 units as of now which is just 2.2 percent. This study was done by JLL as per the instructions and requirement of the Bengaluru chapter of CREDAI.
 


The developers and the builders of the city of Bangalore have again displayed their adeptness in managing the mismatch between the supply and demand says the experts.  They opine that as in the last quarter of 2015 the sales had really increased as the builders of Bengaluru had been successful in pushing the sales up and take advantage of the market. 

CREDAI has been showing this survey results as a mark that Bangalore’s report is not as bad as the other cities like the NCR, Delhi and Mumbai where there are large unsold stocks. It was thought that Bangalore had one lakh unsold units and this news started circulating after some media reports flashed this news. CREDAI thus wanted the actual figures and hence employed JLL for doing this survey.

The report states that the total unsold stock in the category of properties that are under construction, the number of the completed projects stands at a figure which is 82, 357 units. Mumbai is also at the same position but in Delhi the number is 1, 80, 000 as per the report submitted by JLL.
The reason cited by the experts and the researchers for low levels of inventory were most of the developers got the right ticket size and thus provided the market with the right products at the right price. The study was conducted by JLL which covered 956 projects as the sample size. It included both villas and apartments constructed by 433 developers out of which 233 were the members of the CREDAI.

Tuesday, 17 February 2015

Real Estate’s expectation from Budget 2015

The real estate industry of India was in a lull for last the couple of years or more with the pile of unsold stock increasing and the industry was struggling to get the buyer’s attention for products which were highly priced. The buyer’s enquiries poured in plenty but the conversion rate was very low. The realtors only hoped for a better time and few market condition improvement or probably an interest rate cut hoping a revival in the faith of the buyers in the market conditions.  
Although there was a recent interest rate cut by the RBI of 0.25 percent which the banks are trying to implement by lowering the interest rates but the realtors are not happy with it as the demands are more for the compensation of the business loss due to the bad condition of the market. The wish list of the realtors is almost the same with expectations of improvement of few of the common issues plaguing the industry. Moreover the expectations of the real estate industry is high not only for the reason that the industry has a justifiable share in the country’s GDP but the central government’s measures seem to be in tune with the vision and aspirations of the industry as well like “100 smart cities” and “Housing for all by 2022”. With the central government budget scheduled at the end of this month the whole of real estate industry expectantly awaits the budget session with a lot of hopes and aspirations. Let’s discuss these issues in detail.


Faster project Approvals: 

The developers were campaigning for a long time for speedier project approvals for the good of all. In many cities like Mumbai and others approvals are not only delayed but they inflate the cost of construction by 40 percent, according to an estimate. Thus speedier approvals will boost the supply of housing and real estate products and also propel the business conditions on the positive by helping to bring the prices down. They hope that the budget should bring some relief on this front without making any room for compromise in quality of the project and it shouldn’t either fail in providing support infrastructure in the new areas that’s being developed.  


Practical impetus for affordable housing. 
  
The central government had promised a lot in promoting affordable housing and detailed its vision for the same in the past nine months. The Indian real estate sector expects the government to provide provisions that back their vision in the policies and financial strategies in the next 12 months to come. 









The Rental Housing segment should be boosted by providing tax benefits and incentives.
  
At present rental income is considered as taxable like other sources of income which if given certain incentives and exemptions can boost the rental housing segment to a considerable extent propelling demand and facilitating increase in supply in the urban areas. 
  
Implementation Of The Real Estate Regulatory Bill (RERA).  

The Real Estate Regulatory Bill which is an attempted statute in bringing regulations to check the end users and buyers from being exploited is being postponed and the realtors expect a speedy redressal of the issue so that it becomes attractive for the foreign buyers and NRIs as well. The realtors feel that the central government should put an end to the suspense of the realtors by making this much required policy a reality.
  
Encouragement of Foreign Direct Investment (FDI) in Infrastructural Development. 

India needs huge infrastructural development which it is deficient in, to help foster progress and bridge the infrastructural gap in planning and development. The realtors expect more provisions to welcome foreign investors in this sector.  

Real Estate Investment Trusts (REITs) to be promoted on faster track. 

The foreign investment funds abstained from the Indian real estate market because of the lack of regulation, bureaucratic red tapes and political instability in the country. It is expected from the new government to make policies which are more investment friendly and adopt measures to attract more investment introducing a more investment friendly tax structure. REITs if introduced in India can be a panacea for the real estate industry as well as for the economy. The budget is expected to address this issue.
  
Land Acquisition Rehabilitation and Resettlement Act. should be relaxed with more productive clauses.
  
The Land Acquisition Rehabilitation and Resettlement Act. has been amended and reformulated so many times but has failed to counter the land related bureaucracy in India and has rather done the opposite. The real estate sector is desperate to ease the land settlement as the sector needs lot of land which is required for development and infrastructure improvement too. With the declaration of construction of 100 smart cities and housing for all, the union budget is expected to streamline the LARR Act. with relaxations in the rehabilitation clauses and other factors.  

More incentives for boosting Sustainable Real Estate. 

The ensuing budget should present a clear cut benefit statement regarding the consumers of green real estate in the country. The stakeholders of the residential real estate sector of India definitely requires greater encouragement to go green as most of the realtors and residents are adverse to paying extra premium for a green residential project and developers are also not so active in this segment because of the low demand. The union budget is expected to address this drawback by declaring few state level subsidies for more development of greener spaces so that the developers can also keep their costs in control.
  
A further interest rate cut. 
  
The realtors feel that a recent cut in the interest rate is certainly a good move but the industry needs more slashing of interest rates. A flow of liquidity should be ensured to ease the situation which makes the cost of funding for both the buyer and the builder lower than what it is today. The realtors feel that if the RBI does not take steps in this regard the central government should make provisions for the flow of liquidity to the realty segment.  
 
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